UK firms poised to move jobs and production – CBI Survey

Increasing numbers of UK companies are drawing up contingency plans to move jobs and production abroad because of uncertainty surrounding Brexit, according to a survey by the Confederation of British Industry (CBI).

David Sapsted

22 October 2018

The survey of 101 large companies and 135 SMEs found the majority planned to begin implementing their contingency plans by December unless greater clarity emerged over a post-Brexit deal.Publication of the survey came after a warning from Nicky Morgan, the Conservative MP who chairs the Commons Treasury Committee, who said the current impasse in negotiations was doing "tremendous damage" to banks and other financial services in the City of London.She said that, aside from the short-term consequences of jobs and European hubs moving out of the UK, there were concerns about longer-term effects with international institutions looking farther afield when it came to major investments.

56% of businesses prepare to adjust supply chains abroad

The CBI found that more than half of the businesses surveyed had drawn up contingency plans with 30 per cent of them planning to relocate production and services overseas, and 56 per cent of them preparing to adjust supply chains outside the UK.

Carolyn Fairbairn, CBI director-general, warned that "the speed of negotiations is being outpaced by the reality firms are facing on the ground" with almost a fifth of firms already saying the point of no return for triggering their plans had already passed.

A significant impact to the UK economy

“The situation is now urgent," she said. "Unless a Withdrawal Agreement is locked down by December, firms will press the button on their contingency plans. Jobs will be lost and supply chains moved.“The knock-on effect for the UK economy would be significant. Living standards would be affected and less money would be available for vital public services including schools, hospitals and housing. “Uncertainty is draining investment from the UK, with Brexit having a negative impact on eight in 10 businesses. From a multinational plastics manufacturer, which has cancelled a £7 million investment, to a fashion house shelving £50 million plans for a new UK factory, these are grave losses to our economy.“Many firms won’t publicise these decisions, yet their impact will show in lower GDP years down the line. As long as ‘no deal’ remains a possibility, the effect is corrosive for the UK economy, jobs and communities.

Businesses displaying remarkable resilience

“Businesses have displayed remarkable resilience since the referendum, but patience is now threadbare. Negotiators must secure the Withdrawal Agreement before December to unlock a transition period. The message to politicians on all sides is, ‘Your actions will echo through generations’.”Meanwhile, Mrs Morgan reiterated her fears over the damage Brexit negotiations were wreaking on the City of London with "massive" uncertainty prompting larger financial organisations to prepare for a worst-case scenario.In an interview with Prospect Magazine, Mrs Morgan said, "Brexit could do tremendous damage to the City - there will be a short-term impact seen in the contingency planning for a hard Brexit."But I worry much more about the longer term damage — the talent from overseas that decides London isn’t for them, the overseas HQ that decides to invest elsewhere in Europe when, previously, London would have been an automatic choice."London has faced many challenges and will succeed — the question is how long it takes for the bounce back to happen."

Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online DirectorySubscribe to Relocate Extra, our monthly newsletter, to get all of the international assignments and global mobility news.